Yet again an inaccurate article has been written about the mortgage brokers role in the mortgage meltdown. This time it's a man by the name of Ralph Roberts who wrote an article for realtytimes. com.
It has to be one of the most offensive and innacurate articles about mortgage brokers I have read in some time. Below is an email that I wrote to Mr. Roberts in response to his error filled article.
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Mr. Roberts:
I am writing to notify you of the glaring errors contained in your article "The Truth About the Mortgage Meltdown", which I read on realtytimes.com.
"When someone borrows $300,000 to purchase a home, for example, the broker receives 2 points at closing for a total of $6,000. They then package the loan with other loans and sell it to the market at 104 percent, or $312,000. In this case, the originator just "earned" $18,000 off the mortgage loan -- the $6,000 commission plus the $12,000 markup."
Mortgage brokers do not package loans. Mortgage bankers package loans as you described above. Mortgage Brokers are compensated in one of three ways. We are compensated by the lender, by the borrower, or in combination by both the borrower and the lender.
"In the current system, most banks rely on brokers to originate the mortgage loans. These brokers typically have loan officers who work for them and are in charge of selling loans to consumers, helping the consumers fill out their loan applications, and performing other tasks to expedite the loan process. Loan originators receive a commission for every loan that's approved, and because they are lending someone else's money, they take on risk only indirectly."
Loan originators receive a commission on loans that fund not when a loan is approved. A loan approval means nothing and often times many loan originators work with clients for months and receive no compensation. We are not lending someone else's money. We are a third party facilitator that matches a qualified borrower with the wholesale lending institution that will provide the best possible loan for that borrower.
"When bad loans are traced back to mortgage fraud, misrepresentations, and misdeeds, originators takes a double hit. They are forced to buy back the bad loans, and the lender cuts off access to future transactions. With huge chunks of money flowing out and little or no money flowing in, the mortgage originator is forced to close up shop. That is what is currently happening and why we are now seeing a mortgage meltdown."
The title, mortgage originator, is classified as a person who originates mortgages for a mortgage broker or mortgage banker. Your article seems to be pointing the finger at mortgage brokers yet you use the term "mortgage originator." Your description of a mortgage broker actually refers to description and function of mortgage bankers. In fact, I cannot even tell what you are attempting to write.
"MILA, a subprime wholesale lender that was based in Mountlake Terrace, Washington shut down during the spring of 2007, primarily due to the fact that its loan officers were responsible for huge numbers of fraudulent loans. Several employees who refused to go on the record reported that they passed along proof of fraud committed by at least one of the company's loan officers. This person made so much money for the company that instead of firing its employee, MILA relocated and promoted the person. "
A wholesale lender does not have loan officers. Wholesale lenders employ account executives who are compensated by their lending institution. If this wholesale account executive was committing fraud it was not fraud being committed by a mortgage broker. MILA would function in the capacity that you describe to be a mortgage broker. Are you know saying that the mortgage meltdown was attributed to wholesale lenders? If so, I thought the mortgage meltdown was attributed to mortgage brokers?
I strongly suggest you stick to writing about, coaching and selling real estate as that's what it seems you do best. You are obviously not educated about mortgage finance as if you were, you would not have been so careless in writing this article today. Individuals, such as yourself, do nothing but misinform the public about the industry and compound the issues we mortgage brokers face daily.
I eagerly await your response but highly doubt you will respond.
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As a mortgage broker I have become increasily frustrated with the amount of articles found with misinformation provided by individuals via the internet. The recurring theme is that none of these "authors" have knowledge or first hand experience about what they're writing about.
To read the article in it's entirety please go to http://realtytimes.com/rtapages/20071115_truthmeltdown.htm
If you have knowledge about the mortgage industry, please write Mr. Roberts and RealtyTimes.com and ask that this article be removed.
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